Most of the videos i download... especially highlights of cricket matches, or bollywood songs are mostly xvid. divx or avi. And if i want to download anthing from youtube for offline viewing then i can download flv files. although they are not good quality.
So for me these files can be directly played on the n800.

If you are talking actually about converting videos why not use the media converter and from there i dont understand why the iphone/touch is better than the n800?? Of course the ui is prettier. that is where it ends.

I understand that mplayer does not have a pretty ui.... but it gets the work done. That is what matters...... for me atleast.